Loan Fraud

Hi Samantha
Welcome to the forums.

We highly appreciate your concern for our community and hope that you will continue to help us with more information on related issues.

Thanks,
Caron.

Yeah, its a serious issue and esp for the borrowers as they can easily be manupulated by the lenders.

If I want to take a loan with a repayment term upto 60 months, what should be my credit worthiness?

Hi, Mikee

Welcome to MortgageFit Forums

If your household members are included while assessing your credit worthiness, then your monthly annuity should not exceed 30% of the net household income after the deduction of payments towards other loans. Your total monthly loan related payments in this case should not exceed 50% of your net monthly income. But if you do not include your household members, then the total monthly payments towards other loans should not exceed 30% of your net monthly income.

Thanks

Jessica

Hi

I would like to share some more information regarding loan frauds committed by borrowers.

• Borrowers may submit false information on loan application related documents.
  
  
• He may also provide false proof of tax returns along with the loan application when it is submitted to the U.S department of Housing and Urban Development.
  

Thanks,
Jerry

[Edited by Jessica]

Hi Jerry

I appreciate your effort in helping others. I believe such information will help our community.

Hope we will be benefited from your valuable information in future.

Thanks,
Caron
For Mortgagefit Community.

I'm a loan processor and I'm being asked, or maybe told is a better term,
to process two loans simultaneously for the same borrower, then
submit them to two different lenders withought either lender knowing
about the others. Obviously, since both properties are multi unit, the
lender having knowledge about the other purchase could substantially
affect their decision making. My employer insists this isn't fraud, because
they don't own the other property yet and the deal could fall through.
I'm very uncomfortable about processing these loans unless both
lenders have full knowledge of both loan. Am I right in my insistance
on this?

Hi Sue,

I think you are absolutely correct.

You should not hide anything like that from the lenders. If they come to know at any point of time, then it can be a real problem to you and your borrower.

So, stick to your point and try to make the borrower understand that every thing should be disclosed to the lenders to avoid any future trouble.

Regards,
Blue

Hi Sue,

Welcome to MortgageFit forum.

I agree with Blue that you should discourage your borrower in hiding facts. When false documents are submitted or some facts are omitted to obtain a loan or additional funding (may be for different properties), it falls within the process of loan fraud.

It is a federal crime to make a false statement and manipulate your credit history in front of a lender. This should never be encouraged.

It is better to reveal everything to a lender in order to establish good faith and avoid any future trouble. If at some point of time things are caught, then one can't get away saying that he was not aware of the fact what he did was illegal.

So, I would say that you have taken the right decision. It's good to know about your honesty. You need not bend to the borrower under pressure, when you know that it is illegal. Instead try and make him understand.

Wish you good luck. Your valuable suggestions in our forum, as a loan processor are always welcome.

Regards,
Caron.

Actually, it wasn't the borrower asking me to withold information, it was
initially the loan officer and then my boss. I did, however, make it
clear that I would not be able to process these loans withought disclosing
all information. I was a bit concerned I would lose my job over it, and
I still may, but my boss is now clear that I will not do it, and says
we will go ahead and disclose. Thank you for your replies.

Hi Sue,

We are glad that we could help you in your decision. Honesty and faith are wealth that people should not lose and ultimately it helps the business in the long run. You will be successful in life if you remain clear to your mind.

You are an honest person and It was nice meeting you. In future also, feel free to discuss your problems with us. We will be happy if we can help you someway.

Regards,
Caron

how can I protect myself from becoming victim of loan fraud?

Hi Facinelli,

You can safe guard yourself from becoming a loan fraud victim if you do not fall into the trap of someone persuading you into making false statements on your loan application.

Some such common false statements are like;
1.Overstating your income than what it actually is,
2.Wrong information about source of down payment you are making,
3.Amount of your debts and their nature.

Main thing is all information provided on the loan application should be correct, false statements on the application is a fraud and can result in criminal penalties.

You can go through this HUD page to know more about how to protect yourself from becoming victim of predatory lending or loan fraud: http://www.hud.gov/offices/hsg/sfh/buying/loanfraud.cfm

Miller

Hello everyone this is a great topic,

Yes mortgage fraud is a HUGE issue right now facing the industry. I just attended a fraud seminar two weeks ago and was presented with 100's of cases and convictions of mortgage fraud here in my local market. It was a huge eye opener for me and I hope everyone who reads this takes this to heart.

FACT:
The FBI has launched the largest ever operation to crack down on mortgage/banking fraud
The is operation known as "Continued Action" and they are going after and convicting borrowers, sellers, loan officers, processors, appraisers and realtors who try and commit mortgage fraud. This operation is larger than the one launched after 9-11. There case load is up over 500% in the last 3 years.

They are actively hunting for fraud, not waiting till someone informs them. They have placed spies in mortgage branches, appraisal firms, and realtor firms and are building RECO cases against groups of people who are committing fraud.

The small BIG no-no's.

Many people consider fraud only those people who are crooks trying to hurt people and rob from people. That is NOT the case. Local agencies and the FBI are looking at what many people could consider half-truths and are prosecuting them.

fraud examples:

Stretching your income or expenses to the loan company
Stretching your borrowers income
stating the property is owner occ, when its tenant
Knowingly not including expenses the borrower has
Pressuring the appraiser on a value or value range
Ordering an appraisal based on a predetermined value range or comparables
Cash-back deals or including ANY personal property in the loan
Knowingly reporting ANY false info on a loan doc.
Sellers and buyers quick flip schemes

If the sales price is over the list price on any single property that has been on the market a normal amount of time, rest assured that local gov. & the FBI will be looking closely at everyone involved to see what happened.

You cannot plead stupid. - If your found guilty, pleading ignorant or saying you thought it was common practice will get you no where. Saying your boss, superior, Realtor, borrower, etc told you to do it and it was ok will get you no where! If your in the in the industry it is YOUR responsibility to if know what you are doing is right or wrong, not the words from banks, brokers, underwriters, processors or escrow.

Trust me; this crack down is much needed in our industry, especially in Arizona. Foreclosures will be going thru the roof this year and mortgage companies all over the place are being shut down or bankrupt due to fraud.


Scared straight yet? Those of you in the mortgage industry, let me know if you want more details on just what is going on. I've got some PDF's I can share.

BTW, this has been a huge issue for a long time, its just no one seemed to care when house prices where skyrocketing.

Very good information Mike, this is a very important topic facing the mortgage industry currently.

If you can share the pdf's you mentioned, it would be great.

Miller